Fight Corruption with e-Procurement

Corruption is a two way process of giving or receiving bribes. Bribes are often just simple transactions.  Someone wants something they’re not entitled to, so they give an official something that he isn’t entitled to.

It’s an exchange of value for an illicit purpose. 

Of course there are far more complicated schemes, but the great majority of ordinary bribes unfold along these lines.

When organizations experiment with removing the personal element and providing more visibility into transactions, they find that the pace of bribes slows. The beauty with e-procurement is that even when the bribing is at the top level, the trail of transactions is readily available, hence the reason for large number of corruption incidences in public domain than witnessed before.

E-procurement replaces paper-based procurement processes with an electronic cycle, encompassing everything from planning through contract management.   This reduces administration costs and increases efficiency.  It ensures better access to information and greater visibility for all interested parties, from bidders to government watchdogs. 

E-procurement is more inclusive, as companies in more remote areas can compete on a fair footing with those in population centers.  They may have greater shipping costs, but they won’t be required to invest in regular face-to-face meetings to woo decision makers.  The metrics for the success of the contract can also be built into the tool:  automatically collecting information about price, delivery, speed, and rejection rates for shoddy products. 

Vendors establish an auditable online reputation for quality over time.  At the same time, the funneling of contracts to substandard or overpriced vendors will be easily spotted in an analysis of the data. 

The strength of e-procurement in the anti-corruption agenda arises from capacity to greatly reduce the cost and increase the accessibility of information as well as automate practices prone to corruption. E-procurement system is not a stand-alone process but should encompass other stakeholders to bring about positive transformational results. Transparency and accountability are built into e-procurement specifications and design in order to allow for a meaningful analysis of the information generated. This greatly minimizes the risk of corruption.

Standardising and establishing the automation of processes

Non-standard bidding documents create space for manipulation and lead to opaque decision making. In order to reduce the opportunities for corruption, it is essential that administrative procedures and decisions happen in full compliance with the law, in a transparent manner and with limited discretionary decision-making powers.

Standardization of documentation increasing predictability and easy access to bidding documents and information about the process.  The automation of a standardized process limits the opportunity for public officials to manipulate the process or request bribes and kickbacks.

In addition to reducing the risk of manipulation, the automation of processes and procedures reduces the number of encounters between potential bidders and public officials, thus further limiting opportunities for corruption.

Moreover, standardisation, consistency, and the possibility of accessing documents and bidding online reduce bureaucracy, time and costs, which in turn also reduces the incentives for business to resort to corruption to speed up the process and work around bureaucratic bottlenecks in order to participate in procurement tenders.

Increasing access to information

One of the main benefits of e-procurement systems is accessibility to key documents and information. More transparency and access to information help to improve fairness, efficiency and competition as well as reducing the opportunities for corruption.

Opportunities for corruption in simpler purchases, such as the buying of office equipment and material, can also be further reduced with the adoption of electronic solutions such as e-catalogues and reverse auction. These are tools that allow for the standardisation and automation of processes, that were previously conducted in a different and opaque manner, and which allow for more accurate price and supplier comparison.

Increasing competition and avoiding collusion

As mentioned, more transparency in procurement processes may influence the level of competition in the market, such as the number and quality of bidders. E-procurement system therefore may solve several of the problems often identified by companies wishing to participate in public procurement processes, such as favouritism, where privileged information is distributed to firms related to or in agreement with procuring officials.

Research has shown that e-procurement, transparency and ease of access to information increases the participation of “honest” firms, more bidders and better quality of bidders.  This could lead to reduced costs, but certainly better quality of services acquired by organizations.

 A low number of bidders competing for a public contract is seen as being strongly correlated to potential corruption and collusion and a strong reason to raise a red flag.

Facilitating contract oversight

After the contract is awarded, the risks of corruption and mismanagement are numerous. The specifications of the contract can be altered by public officials to benefit the awarded supplier, invoices may not be paid on time, the service may not be performed/delivered according to the original specifications, there may be delays in the delivery of goods and costs overrun, etc.

An electronic procurement system contract management solutions can help to address these problems. By making information available to a wider number of public officials, oversight agencies and the public at large, e-procurement may provide disincentives for corrupt behaviour.

Improving oversight and audit capabilities

e-procurement is particularly important in improving the audit trail capabilities, which in turn can help to increase transparency and accountability and detect corruption.

Electronic systems may allow the detection and prevention of corruption in procurement if data on tenders, bidders and contractors are collected and stored in a structured way and is accessible for investigation and analysis.

Enhancing horizontal accountability

E-procurement increases and improves opportunities for citizens, the media, civil society and even bidders themselves to monitor procurement processes.

The media, academia and civil society make use of the data available in e-procurement portals to investigate and expose potential corruption cases.

The portal allows data comparison and information on procurement processes, and can be filtered by purchaser, vendor, sector, region, type of procurement procedure, criteria and date. In this context, the portal is also an important tool for analysing the degree of competition or market concentration.